All Posts Tagged Tag: ‘Health Care’

Towers Watson’s 2014 Employer Survey on Purchasing Value in Health Care surveyed 379 companies and found that most employers will be fine-tuning employee benefits in the coming years in order to control the costs of benefits.

The results of the survey only strengthen the general consensus in the health insurance industry that things are changing.

Many are worried by this change, but the truth is that it creates a huge opportunity for brokers and agents.

The survey found that “in spite of all their concerns about cost, 98% of employers remain committed to providing subsidized health care benefits to active full-time employees, at least for the short term.”

This means brokers are still important, but simply a group plan isn’t enough. Brokers and agents will need to change what they offer.

In the survey, these companies noted that in the next few years, they were likely to:

Adopt new technology solutions;

Adopt Exchange-based benefit options;

Establish direct cost arrangements;

Offer action-based incentives;

The great part of this is that brokers and agents can turn to a fast solution, ready to sell: Benefit Credits.

Benefit Credits is a solutions for groups under 50 full time employees who are dropping group coverage. There are four reasons why this is a solution for modern employee benefits:

It offers a new technology system, and online marketplace, that offers a paperless and simple solution to enrollment;

Employees can shop and enroll in plans on private or public exchanges. Some may even qualify for a subsidy;

The employer controls cost by designating a certain dollar amount per employee to spend on their marketplace;

If the employer chooses, they can incorporate other benefits and incentives, like a gym membership reimbursement, or pet insurance.

Private health care exchanges bring with them major implications for employer-sponsored benefits, including a shift to defined contribution health care and increased access to data.

A recent report from the Kaiser Family Foundation says that private exchanges have the potential to reshape employer-sponsored health insurance, which covers nearly 56% of the U.S. non-elderly population.

Kaiser estimates that at least 2.5 million people enrolled through private exchanges in 2014, including 1.7 million group enrollees. Further, they found that 13% of employers with 200 or more workers who currently do not offer benefits through an exchange were considering such an approach. While â€œwe donâ€™t totally know what is going to happen with them,â€ Kaiser Senior Policy Analyst Matthew Rae says there was new exchanges in 2014 and even more expected moving forward.

Among those emerging implications are:

1. Shift to defined contribution â€” Kaiser says that by â€œfacilitating a shift to definedÂ contribution through a fixed dollar benefit, private exchanges offer the potential for cost stability to employers, while giving greater choice to employees (albeit with greater financial risk as well.)â€ While employees have greater risk, they also have more control over how to allocate their benefit dollars between medical and ancillary plans. Kaiser says that interviews with exchange sponsors indicate that of active group lives using private exchanges, at least half are using a DC model

2. Shift back to fully insured for large employers â€” several private exchanges require large employers move to fully-insured to join the exchange, including Aon. A shift to fully-insured places the risk with insurers instead of employers, which is financially beneficial to the carriers who provide the product, Kaiser says.

3. Increased access to data â€” a private exchange is the â€œconnecting pointâ€ for employers, employees and carriers, and they have the ability to aggregate data that is traditionally difficult to access, Kaiser says.Â â€œA well-performing exchange should be able to show the choices employees are making in plans, how the health status of the overall workforce is changing and whether the promised savings are being realized,â€ says Cathy Tripp, director of Towers Watson OneExchange in the Kaiser report.

The future

While private exchanges continue to change the health landscape, not all employers are looking at them, Kaiserâ€™s Rae says. â€œIt depends on how happy the firm is with its current plan and how happy their employees are with plan offerings,â€ he explains. â€œâ€¦If you offer a plan and employees like it, that sounds like a reason not to mess around with it,â€ assuming it is compliant with new regulations of the Affordable Care Act.

While Rae says that, unsurprisingly, all exchanges are predicting large growth in the future, â€œthat is possible but we donâ€™t know. â€¦ We donâ€™t know if this is going to consume the market or just be a new [tool] and employers keep doing what they are doing.â€

ARLINGTON, Va.–(BUSINESS WIRE)–Results of a July 2014 survey of midsize to large employers by global professional services company Towers Watson (NYSE, NASDAQ:TW) showed that 28% said they had already extensively evaluated the viability of private exchanges. Nearly one in four (24%) said private exchanges could provide a viable alternative for their active full-time employees as soon as 2016.

â€œPrivate exchanges are a relatively new path for many employers â€” one that has only recently become available to provide benefits for active employeesâ€

The results are from the 2014 Towers Watson Health Care Changes Ahead Survey, which was completed by 379 employee benefit professionals from a variety of industries and reflect health care benefit decisions for 2016 â€“ 2017.

The survey also revealed that the top three factors that would cause employers to adopt a private exchange for full-time active employees are:

Evidence they can deliver greater value than their current self-managed model (64%)

Adoption of private exchanges by other large companies in their industry (34%)

An inability to stay below the excise tax ceiling as 2018 approaches (26%)

Public Exchanges Not Considered Viable for Full-Time Active Employees

In contrast, nearly all employers surveyed (99.5%) said they have no plan to exit health benefits for active employees and direct them and their families to public exchanges, with or without a financial subsidy. More than three out of four employers (77%) said they are not at all confident public exchanges will provide a viable alternative for their active full-time employees in 2015 or 2016.

â€œPrivate exchanges are a relatively new path for many employers â€” one that has only recently become available to provide benefits for active employees,â€ said Dave Osterndorf, a managing director with Towers Watsonâ€™s OneExchange. â€œHowever, with the Patient Protection and Affordable Care Actâ€™s excise tax top of mind for large employers, and with the potential to cost companies billions of dollars unless they act now to keep the cost of health benefits below government-mandated thresholds in 2018 and beyond, new solutions are necessary. Even employers that have managed to keep increases in their health care benefit costs lower than industry averages are working very hard to maintain that success. Private exchanges offer employers a new opportunity to save on health care coverage with a reduced operational burden, which is the main reason they are more seriously evaluating them for their active employees.â€

Data from the 2014 Towers Watson Health Care Changes Ahead Survey revealed that nearly three-quarters (73%) of employers said they are somewhat or very concerned they will trigger the excise tax based on their current plans and cost trajectory. More than four in 10 (43%) said avoiding the excise tax is the top priority for their health care strategies in 2015.

Osterndorf added, â€œEffective private exchanges can provide value in many ways. For example, as more employers move to account-based health plans, they can realize the promise of avoiding the excise tax while providing the added benefit of putting employees in charge of how their health care dollars are spent. Private exchanges offer more choice, including account-based plans, with the tools and support for helping employees make better health decisions, and recognize the connection between their physical and financial well-being. Employee understanding and engagement are critical to the long-term sustainability of an employerâ€™s program. Private exchanges can accelerate the fulfillment of that goal.â€

According to the 19th Annual Towers Watson National Business Group on Health Employer Survey on Purchasing Value in Health Care, released in March 2014, nearly three-quarters of respondents currently offer account-based health plans (ABHPs), with another 9% expecting to add one for the first time in 2015. Nearly 16% of respondents have adopted ABHPs as their only plan option, up from only 7% in 2012. Nearly one-third of all companies could offer ABHPs as their only option by 2015, if they follow through with current plans.

About the Surveys

The 2014 Towers Watson Health Care Changes Ahead Survey offers insights into the focus and timing of U.S. employersâ€™ plans and perspectives related to their health benefits, and their efforts to better manage costs and employee engagement, as well as their planned responses to the business risks associated with the 2018 excise tax. The survey was completed during July 2014 by 379 employee benefit professionals from midsize to large companies across a variety of industries and reflects respondentsâ€™ 2014 â€“ 2017 health care benefit decisions. The responding companies comprise a broad range of industries and business sizes, and collectively employ 8.7 million employees.

The 19th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care tracks employersâ€™ strategies and practices, and the results of their efforts to provide and manage health benefits for their workforce. This report identifies the actions of high-performing companies, as well as current trends in the health care benefit programs of U.S. employers with at least 1,000 employees. The survey was completed by 595 employers between November 2013 and January 2014. Respondents collectively employ 11.3 million full-time employees, have 7.8 million employees enrolled in their health care programs and represent all major industry sectors.

ABOUT TOWERS WATSON

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has more than 14,000 associates around the world and is located on the web at towerswatson.com.

Employers remain committed to offering employees and their families health care insurance, however, company leaders plan to make major changes in plan design and strategy in order to lower escalating costs, comply with Affordable Care Act regulations, avoid business risks associated with the 2018 excise â€œCadillacâ€ tax and improve consumer engagement.

According to a recent Towers Watson survey, 2015 health care costs are projected to increase by 4% after plan changes, compared to the 5% uptick that employers previously projected for 2014. Total per-employee costs are expected to average $13,037, with employers paying $10,233 and employees paying $2,804. If no changes were made to medical and pharmacy plan designs, vendors, provider networks or other features, the increase would have been 5.2% for 2015.

Despite cost increases, nearly nine in 10 employers (87%) say health care benefits will be a key part of their employee value proposition in 2015. And this rate slips only slightly to 83% for 2016 and beyond.

Employers are also committed to continuing coverage for their part-time workers, with 91% of employers saying they are unlikely to discontinue health care plans for this workforce segment. When asked about using public exchanges, more than nine in 10 companies (97%) report they do not plan to discontinue health care plans for part-time employees and provide a financial subsidy to purchase coverage via this delivery channel.

Still, health care reform, in particular the 2018 excise tax, heightens affordability concerns. Nearly two-thirds of employers believe employeesâ€™ health care costs will be higher than in the past. The excise tax ceiling is driving major strategy changes since more than half (54%) of employers will trigger the â€œCadillacâ€ tax by 2020 if no changes are made to their health care benefit strategy.

This threat is one reason that two-thirds of CEOs and CFOs are more directly involved in health care benefit decisions than they were three to five years ago. Further, 54% of the senior finance executives surveyed by CFO Research pinpoint controlling the employer cost for health care benefits as their companyâ€™s top priority for its employee benefit programs over the next year.

Employers are making moderate to significant changes to reshape their health benefit plans between now and 2017 in order to reduce costs, according to Towers Watsonâ€™s 2014 Health Care Changes Ahead Survey, which compiled feedback from 379 midsize to large U.S. organizations. In particular, employers pointed to three specific factors that will help frame employer-sponsored benefits:

1) Employers will focus more on outcome-based incentives and the way they subsidize coverage for spouses and families.

In order to transform employees from passive patients to engaged consumers, 49% of employers expect to offer an account-based health plan enrollment as their only plan option by 2017. Employers are also exploring defined contribution arrangements with 16% of plan sponsors using DC approaches by 2015 and another 30% considering this solution for 2016 or 2017.

Employers are becoming more interested in telemedicine, with implementation expected to reach 37% by 2015, with another 34% considering the option by 2017.

To spur employee accountability and encourage healthy behaviors, outcomes-based incentives are becoming more prevalent: 18% of employers offer them today; another 10% plan to offer them in 2015, and an additional 48% by 2016 or 2017.

Additionally, 63% of companies expect to use spousal exclusions or surcharges when coverage for a spouse is available elsewhere by 2017, and 52% are considering making significant reduction in subsidies for employeesâ€™ family members.

Two-thirds of employers (66%) will use eligibility and/or utilization restrictions as part of their specialty pharmacy strategy by 2015. Another 15% are considering this solution for 2016 or 2017. In addition, nearly six in 10 (58%) will evaluate and focus on specialty pharmacy spend within the medical benefit by 2015, and 24% more will consider this by 2016 or 2017.

Companies increasingly prefer to work with health plan partners that are aggressively adopting new, value-based payment methods that incorporate criteria for improving efficiency, quality and outcomes rather than reimbursing providers for each unit of service. Nearly three in 10 employers (29%) will evaluate partners with these strategies in mind for 2015, and another 32% are considering this approach for 2016 or 2017.

The use of value-based designs and benefit differentials that drive employees to high- performance or narrow networks for medical care is projected to rise. One in seven organizations (14%) will use value-based designs by 2015, and another 34% are considering them for 2016 or 2017. One in five (20%) employers will offer benefit differentials by 2015, and 37% more are examining this tactic for 2016 or 2017.

While employersâ€™ interest in private exchanges for active employees continues to grow, many await additional evidence that this model can deliver more value than their traditional self-managed program. Their three qualifications for seriously considering this option for active full-time employees are:

Proof that private exchanges can deliver greater value than their current self-managed model for actives (64%);

Actions of other large companies in their industry (34%);

Inability to stay below the excise tax threshold using their traditional approach (26%).

Almost three in 10 (28%) employers have done an extensive analysis of the viability of a private exchange for their organizations. As more employers conduct analyses, the adoption rate is likely to increase. In fact, their confidence in private exchanges as a viable alternative for employer-sponsored coverage builds between plan years 2015 (14%) and 2016 (24%).

Public exchanges, however, do not enjoy the same confidence that private ones do, likely because of their highly publicized rocky start. Nearly eight in 10 (77%) employers lack confidence in public insurance exchanges as a viable alternative to employer-sponsored coverage, and almost all employers surveyed (99.5%) have no plans to exit active medical plans and direct employees to this arrangement.

3) Employers will center technology as a pivotal tool in strategies to boost employee engagement and improve access to health care.

Increasingly, employers are turning to personalized digital technologies to engage employees with their health benefits and encourage healthier lifestyles. In fact, 76% of companies are exploring mobile apps and fitness wearables for activity tracking, such as fitness and nutrition.

Further, more than half of employers are using mobile apps and fitness wearables for health care delivery (56%) and price/quality transparency tools (54%). These options spur employees to take a more active role in their personal health status and pursue a greater understanding of their health care benefits and services.

Across the board, the health care insurance market is undergoing its most significant transformation in decades. With the creation of public exchanges, the expansion of Medicaid, and the elimination of pre-existing conditions as a reason to deny coverage, we are witnessing unprecedented innovation across the spectrum.

For employers, this new reality creates a rare opportunity to overhaul health care benefit offerings, while reducing costs and improving the overall health & wellness of their employees. Studies have proven that healthy employees are more productive and take fewer sick days than their less-healthy co-workers.

One of the best ways for employers to participate in this revolution is to switch to a defined contribution method of paying for their employeesâ€™ health benefits. That is, offering a fixed amount of money allocated to each employee for his or her health care coverage.

To make a defined contribution system work, employers provide workers with access to an online private exchange, which mimics the new public exchanges by offering a wide range of health care coverage options, including medical, dental, vision, and even weight management and fitness programs such as Retrofit.

By contrast, a traditional defined benefit program is built around a small number of insurance plans and limited options for employees. Defined benefit plans often result in higher costs and less predictable expenses for the employer.

Many employers are already switching to private exchanges and defined contribution programs. For 2014 open enrollment, Accenture estimates that more than 3 million employees were covered under private exchanges. By 2018, Accenture projects that 40 million employees will be enrolled in these exchanges under the defined contribution model. While large employers such as Sears and Petco have already made the jump, most of the growth is among mid-market employers with around 1,000 employees, according to Accenture.

Products and services are teaming up to make it simple for employers to offer such options. As consumers get accustomed to the new world of health care insurance, more of them will be looking to their employer-sponsored plans for wider choice and non-traditional benefit options such as a wellness and weight loss program.

I think itâ€™s high time for employers of all sizes to look closely at the defined contribution/private exchange model to figure out when â€“ and not if â€“ itâ€™s a change they are going to make.

Hyman is CEO at Retrofit, a weight loss wellness vendor. Reach him at Jeff@RetrofitMe.com.